December 2017 Kansas City Fed Manufacturing Remains Positive But Declines

Of the three regional manufacturing surveys released for December, all were in expansion.

Sorry for the delay in publishing this post – but the internet sucks on Princess Cruises (as they use most of the bandwidth for their internal use). Specifically I would like to thank Brian OConnor, Vice President, Public Relations for Princess Cruises who refused my request for assistance.

There were no market expectations from Bloomberg / Econoday. The reported value was 12. Any value below zero is contraction.

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-The Federal Reserve Bank of Kansas City released the December Manufacturing Survey today. According to Chad Wilkerson, vice president and economist at the Federal Reserve Bank of Kansas City, the survey revealed that growth in Tenth District manufacturing activity continued at a solid pace, and optimism remained high. “Factories in our region remain upbeat about hiring and capital spending as we head into 2018, following strong growth in recent months,” said Wilkerson.

Growth in Tenth District manufacturing activity continued at a solid pace, and optimism remained high for future activity. Price indexes were mixed, but posted little change overall. The month-over-month composite index was 14 in December, lower than 16 in November and 23 in October (Tables 1 & 2, Chart 1). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Growth in factory activity moderated slightly at both durable and non-durable goods plants, particularly for chemicals and plastics products. Month-over-month indexes were mixed but remained generally solid. The shipments, new orders, and order backlog indexes all decreased somewhat. However, the production index edged up from 15 to 21, and the employment and new orders for exports indexes also rose. The finished goods inventory index dropped from 2 to -11, and the raw materials inventory index also decreased. Most year-over-year factory indexes were slightly lower in December. The composite index eased from 37 to 30, and the production, shipments, new orders, and order backlog indexes also fell. In contrast, the capital expenditures index jumped from 19 to 39, and the employment index inched higher. The new orders for exports index was mostly unchanged. The raw materials inventory index fell from 45 to 15, and the finished goods inventory index also decreased.

Summary of all Federal Reserve Districts Manufacturing:

Richmond Fed (hyperlink to reports):

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Kansas Fed (hyperlink to reports):

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Dallas Fed (hyperlink to reports):

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Philly Fed (hyperlink to reports):

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New York Fed (hyperlink to reports):

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Federal Reserve Industrial Production – Actual Data (hyperlink to report):

Holding this and other survey’s Econintersect follows accountable for their predictions, the following graph compares the hard data from Industrial Products manufacturing subindex (dark blue bar) and US Census manufacturing shipments (lighter blue bar) to the Kansas City Fed survey (light green bar).

Comparing Surveys to Hard Data:

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In the above graphic, hard data is the long bars, and surveys are the short bars. The arrows on the left side are the key to growth or contraction.

Steven Hansen

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